Though no major price increases are foreseen for the near term, the US standard pipe market is expected to maintain its strength for at least the next several months.
Welded pipe business in the US is not as strong as that for seamless pipe, particularly on the standard pipe side, as it does not directly benefit from the booming energy market. However, the markets for all tubular products, welded standard pipe included, are relatively strong compared to other steel products in the US, due to the steady end-use demand and tight supplies.
Though not as strong as pipe used in energy applications, ERW A53 is still seeing solid demand from the commercial construction sector and is benefiting from the lack of Chinese imports. Welded pipes in general are expected to maintain their strength going forward, but with raw material costs on the flat rolled side starting to slow down, no major increases are expected to be seen in the near term.
North American welded pipe producer Northwest Pipe recently posted record second quarter sales, earnings and backlog, citing strong demand from the energy, agriculture and construction markets despite the slowing economy and rising raw material costs. The company, however, does not expect any big price increases for welded pipe in the near future. Brian Dunham, President and CEO of Northwest pipe, stated, "At this time, we believe steel and fuel costs are likely to remain at elevated levels, but unlikely to increase significantly over the next several months. The economy needs to sustain its current levels in order to pass through these higher costs and, at this time, we do not expect any significant downturns in the segments we serve."
Currently, domestic mills are still shooting for approximately $1,850 /nt ($2,039 /mt or $92.50 cwt.) for ERW A53 BPE. There are some reports that the mills are having a hard time achieving these numbers and are in some cases lowering them somewhat to get orders, but other mills say that their demand is so strong that they are having no problems in filling their order books at these prices.
Looking forward, while the market isn't likely to see another price increase akin to the $550 /nt hike announced last month (at least not on the welded side), the flat rolled cost hikes have not slowed to a complete halt - US flat rolled mills have announced hikes of $40 to $50 /nt for September shipments - so these increases will most likely eventually be reflected on the pipe side as well. Right now though, the pricing trend seems to be stable.
As for imports, offers are still not too plentiful, and the market is still feeling the effects of China's absence. In general, a lot of foreign mills aren't offering pipe to the US right now because of raw material sourcing problems. There are, however, some offers from India, Eastern Europe, East Asia, Turkey, and South Africa, and they are typically a good deal more advantageous compared to the domestic numbers (another reason why domestic producers would have a hard time pushing through another big price hike anytime soon).
Indian offers for ERW A53 BPE range from approximately $69.00 cwt. to $71.00 cwt. ($1,521 /mt to $1,565 /mt or $1,380 /nt to $1,420 /nt) FOB loaded truck in US Gulf ports, while GPE offers range from $72.00 cwt. to $74.00 cwt. ($1,587 /mt to $1,631 /mt or $1,440 /nt to $1,480 /nt). Only one Indian mill is currently offering, however, and these prices are trending strongly up due to price increases in India's domestic flat rolled market.
In other import news, the final antidumping and countervailing duties against Chinese standard pipe have been put into place, serving as the final nail in the coffin for these imports, at least until the next sunset review. The US ITC has also determined that LWR pipe imports from China injured the US industry, and were subsidized. The case against Chinese welded line pipe is still going through the legislative circuits, though with the domestic industry's recent successes, it seems likely that the US producers will be triumphant once again.
On the seamless side, though, China is still quite active, and this has not gone unnoticed. There are rumors that US producers will soon file an antidumping case against seamless pipes from China, though it is not clear which type of pipe would be filed against (standard, line, or OCTG); and, with the US producers seeing such strong business for seamless, particularly for OCTG and line pipe, they would have a difficult time proving injury.